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MND NewsWire features plain and simple interpretations of industry related data and events written in a manner that maintains the interest of random readers while still catering to the perspective of a housing market professional.

Congress needs to pass a "Continuing Resolution" by midnight on Friday, April 8th to avoid a government shutdown.

From Wikipedia: A continuing resolution is a type of appropriations legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year. The legislation takes the form of a joint resolution, and provides funding for existing federal programs at current or reduced levels.

Reuters Headlines...

RTRS-WHITE HOUSE SAYS PROCESSING OF SOME PAPER-FILED IRS TAX REFUNDS WILL BE SUSPENDED IF THE GOVERNMENT DOES HAVE TO SHUT DOWN

RTRS-WHITE HOUSE SAYS PROCESSING IRS TAX AUDITS WOULD ALSO BE IMPACTED BY A GOVERNMENT SHUTDOWN

RTRS-PROCESSING OF SMALL BUSINESS ADMIN LOANS WOULD BE AFFECTED IF GOVT SHUTS DOWN - U.S. OFFICIAL

RTRS-US OFFICIAL - GOVERNMENT SHUTDOWN WOULD IMPACT FHA, HAVE "SIGNIFICANT IMPACT" ON HOUSING MARKET IN PEAK HOME-BUYING SEASON

RTRS-US OFFICIAL-NUMBER OF FEDERAL WORKERS WHO WOULD BE IDLED COULD BE IN THE SAME VICINITY AS THE 800,000 IMPACTED IN LAST SHUTDOWN

RTRS-US OFFICIAL-ELECTRONIC FILING OF US TAX RETURNS WILL CONTINUE IN THE EVENT OF A GOVERNMENT SHUTDOWN

RTRS-SIGNIFICANT NUMBER OF PENTAGON CIVILIAN EMPLOYEES WOULD BE FURLOUGHED IF GOVT SHUT DOWN - U.S. OFFICIAL

RTRS-US OFFICIAL-MILITARY WILL BE PAID UP TO APRIL 8TH IF GOVT SHUTS, SALARIES WILL ACCRUE AFTER THEN BUT PAYMENTS WILL BE DELAYED

RTRS-OBAMA SAYS GOVERNMENT SHUTDOWN WOULD HURT U.S. ECONOMY RIGHT WHEN IT'S GAINING MOMENTUM

RTRS-OBAMA URGES DEMOCRATS AND REPUBLICANS TO MAKE COMPROMISES TO GET BUDGET DEAL, KEEP GOVERNMENT RUNNING

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HOW WOULD A GOVERNMENT SHUT DOWN HAVE A "SIGNIFICANT IMPACT" ON THE HOUSING MARKET?

INITIAL THOUGHTS: The government's servers won't be taken off-line. The network will still
be up and running. Essential staff will still be in place. FHA Connection is web-based but ordering FHA Case Numbers ASAP is advised. The IRS is an important part of the loan application process. Tax transcripts are generally accessible online but it seems like a safe move to get 4506-T's ordered now. One obvious thought is not being able to verfiy the
employment status of borrowers with government jobs. Plus there could be a delay in getting current paystubs. FHA and Ginnie Mae aren't the only program offices
within HUD though. HERE IS A LIST OF HUD PROGRAMS THAT COULD BE IMPACTED.....

We see this childish Congressional behavior as politics in their purest form. STANDARD OPERATING PROCEDURES ON CAPITOL HILL. Playing this game of chicken with the bond market carries massive consequences. We're cutting off our nose just to spite our face here. The last thing we want to do is put the U.S. credit rating in the global spotlight. We don't want bond vigilantes chasing after our debt like they are EU debt right now. A "bitter fight over budget cuts" unfortunately would do just that. I hope our so called leaders in Washington avoid that bitter fight. I hope they act like adults and avoid grand-standing and pandering. We don't need bickering. We need common ground. We need to develop a plan and make some moves to restore confidence in our country.

Besides the observations made above, we don't know exactly how a
government shutdown would impact the housing market, we don't see
anything positive coming from it though....mortgage rates certainly
wouldn't react well!

WHAT ELSE ARE WE MISSING HERE?

Do Fannie and Freddie count as government or is that just an "implied" shutdown?

UPDATED AT 9:00 ON APRIL 7, 2011...

Suntrust sent this out last night:

News reports continue to develop regarding a potential government shutdown if budget agreements are not reached by Friday, April 8. Should this occur, there are several areas where our business could be impacted:

Tax transcript: If the IRS is on furlough, we will not be able to obtain tax transcripts. If you have a registered/locked loan with us and have not already delivered it to the branch, please upload your completed and signed 4506T into eMagic TRIO now. Even though the TRIO folder will not contain a complete file, please upload your registration or lock confirmation and select "deliver to Underwriting." You will need to check the audit trail in TRIO to confirm receipt by SunTrust Mortgage. We will order the transcripts prior to the shutdown to minimize a potential delay when you deliver your loan file.

Flood insurance: Borrowers may have difficulty obtaining flood insurance through FEMA during this period.

FHA: We understand that HUD may not support FHA Connection during their hiatus, and therefore we will not be able to order case numbers or perform other functions in FHA Connection while they are on furlough.

Rural Housing: We are not sure of the impact to GUS since that system was created since the last shutdown in 1995. However, we should anticipate the system will not be available. In addition we will not be able to get conditional commitments during the shutdown.

VA: We should anticipate that the system by which VA appraisals are ordered will not be available

UPDATED AT 3:45 ON APRIL 8, 2011

An update from HUD: We know many of you are anxious about where things currently stand with regards to HUD’s Fiscal Year 2011 budget. As we are sure you are well aware, the continuing resolution (CR) under which HUD – along with the rest of the Federal Government – is currently operating, is set to expire tonight. Should the government shut down, most of HUD’s functions would cease.

Housing Counseling Agencies should be aware that:

HCS - The Housing Counseling System (HCS) will not be available. Consequently, counseling agencies will be unable to update agency profile information, submit activity data, or otherwise utilize the functionality in HCS.

Counseling Agency Search Functionality - The HUD.GOV website will be available in “Maintenance Mode” only. This means that HUD.GOV will be up but there will be no updates made to pages on the site. As a result, HUD’s website housing counseling search functionality, and similarly HUD’s toll free number to search for counseling services, will still be available to households seeking counseling services. However, with HCS down, the data behind the search functionality will not be updated.

Grant Funds – While the LOCCS system should be functioning, there will be no GTRs to approve requests for disbursements. Consequently, no grant disbursements will occur during a shut down.

Inquiries – Counseling agencies will not be able to reach HUD staff with inquiries. General inquiries about FHA programs can be directed to 1-800-CALL FHA (1-800-225-5342). However, this call center will have very limited information regarding the Housing Counseling Program and the issue covered in this message.

We hope this is helpful for you to make any preparations that may be
necessary in the event that a shutdown does occur. We look forward to an
FY 2011 appropriation and the resumption of services as soon as
possible.

UPDATED AT 5:30 ON APRIL 8, 2011

Guidance from GMAC...

Pricing Impact

GMACB will continue to accept new locks on FHA, VA and USDA loans. Clients should consider possible delays in government loan processing when locking in rates due to limited capacity of government processing systems such as: FHA Connection, TOTAL Scorecard, GUS and Veterans Information Portal.

GMACB will accept lock extensions on FHA, VA and USDA loans.

There is no impact to agency and Jumbo lock transactions.

Closing, Funding and Purchasing Impact

GMACB Correspondent Funding will not purchase any FHA, VA or USDA loan with a Note date after April 8, 2011.

GMACB Wholesale Operations will not close any FHA (Sponsored Originator) or VA loans after April 8, 2011.

Underwriting Impact

4506-T Processing: If the 4506-T cannot be processed by the IRS, personal income tax returns must be provided in lieu of the processed tax transcript based on the number of years required by AUS or by the Client Guide for manual or Jumbo underwriting. If a 2010 income tax return is provided, a 2009 income tax return must also be included. Signing the 4506-T at application and closing remains a GMACB policy. This applies to all products.

Social Security Number Validation: For Fannie Mae loans, if Desktop Originator (DO) or Desktop Underwriter (DU) require validation of the borrower(s) social security number with the Social Security Administration, the loan file must contain evidence of the validation.

Flood Insurance: It may be difficult to obtain flood insurance through FEMA during this period. Please note that GMACB requires evidence of flood insurance at time of purchase or closing.

GMACB will continue to provide updates regarding the government entities and the system and operational dependencies pertaining to the government shutdown.

There absolutely should be a law that states that in the event of a govt shutdown, every politician in washington will work without pay until the govt is up and running again. Is anyone else sick and tired of these people in Washington making the rules but never suffering the consequences? Our system is set up to cater to the law makers not the citizens they are supposed to represent.

I see Tammy's point, but I would also like to point out that if the salaries in congress were affected by a government shut down, it would add bias to their decisions. In other words: if the governement shut down needs to occur (which it does because it will expose a lot of excess and largesse and incompetence) then congress' decision on whether or not to let that occur should not be influenced by whether or not they will be paid. The best solution would be make elected positions voluntary and unpaid. That way, they'd spend more time living and working among their constituents and less time sitting up in D.C., looking for ways to justify their salaries, which always results in bigger government, more taxes and poorer, less free Americans. Like a wise man once said: "Americans are never in more peril than when Washington is bursting with good ideas."

The impact due to the transcripts is much bigger than anyone is pointing out. Good info here as usual.
http://www.keaneloans.com/2011/04/08/how-will-the-government-shut-down-affect-the-mortgage-industry/

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